February 14, 1995: Apple Computer extends a lawsuit against developer San Francisco Canyon Company to also include Microsoft and Intel. The lawsuit concerns code allegedly stolen from Apple and used to improve Microsoft’s Video for Windows technology.
The lawsuit comes to a head with Apple threatening a multibillion-dollar lawsuit against Microsoft. Meanwhile, Microsoft CEO Bill Gates threatens to cancel Office for Mac.
Apple’s beef with San Francisco Canyon Company started relatively mundanely, but threatened to blow up in a big way. The lawsuit wound up profoundly affecting Apple.
QuickTime on Windows
In the 1990s, Apple found itself leagues ahead of its rivals when it came to video on personal computers. In 1992, Apple contracted software developer San Francisco Canyon to port its QuickTime technology to Windows. A PC QuickTime release arrived in November 1992. The following July, Intel hired San Francisco Canyon to improve Microsoft’s Video for Windows tech.
The problem started when Apple claimed that the resulting software included several thousand lines of code written while San Francisco Canyon was under contract to Cupertino. Apple filed a lawsuit against the developer, and on February 14 extended this to cover Microsoft and Intel.
Not long after, a federal judge ordered Microsoft to stop distributing the current version of Video for Windows. A new version followed, with release notes that said it did not “include the low-level driver code that was licensed from Intel Corporation.”
Microsoft wanted it all
What would have been just another run-of-the-mill lawsuit became a lot more fascinating as a result of the charges leveled at Microsoft by Apple’s lawyers.
With Microsoft at the peak of its success thanks to Windows 95, Apple went into attack mode. Apple accused Microsoft of attempting to undermine it by holding off on beta versions of the new operating system so Apple could make its Macs compatible with Windows.
At the time, Microsoft had given the software to around 40,000 independent software developers. However, the company withheld it from Apple unless Cupertino agreed to drop existing lawsuits against Microsoft. Redmond also wanted Apple to cancel OpenDoc, a software program Cupertino was developing that competed with Microsoft’s Object Linking and Embedding technology.
Microsoft spokeswoman Pam Edstrom said: “Legally, Microsoft is under no obligation to give away beta copies of its software. Microsoft chooses to make prerelease versions of its software widely available to software companies because they offer input that allows Microsoft to improve the product and because their livelihoods depend on Windows. Neither is the case with Apple.”
Microsoft and Apple come to terms
Many viewed that as an example of Microsoft beating up a smaller, marginal developer. As the Los Angeles Times wrote:
“The latest dispute between Apple and Microsoft escalates a growing feud between the two companies that stems fundamentally from their rivalry in the market for the basic core software controlling the nation’s personal computers. Microsoft makes the operating system, or core software, for about 85% of all PCs, but it also wants the 15% that Apple controls.”
Ultimately, Microsoft and Apple resolved their dispute in August 1997. Apple agreed to drop all lawsuits against Microsoft, including the QuickTime source code one. Apple also agreed to make Internet Explorer its default browser (later replaced by Safari). Microsoft bought $150 million of non-voting Apple stock, and continued to support the Mac in terms of software.
The cash injection came at a time when Apple reportedly faced bankruptcy within just a few months. Not too long after, Microsoft hit its tech bubble peak and began an early-2000s decline. Apple released the iMac G3, iTunes, iPod, iPhone and other products that fueled its rise to tech dominance.